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Liam Fox spends tens of millions on firms warning of Brexit dangers

The international trade secretary says even a no-deal Brexit would be good for British business. But his department has spent huge sums with companies that warn of Brexit dysfunction, chaos and disruption.

Liam Fox is often seen as the most bullish Brexiter in Theresa May’s cabinet. For the Brexit trade minister ‘no deal’ is nothing to fear. But Fox’s Department for International Trade (DIT) has spent tens of millions on consultants who have warned of “chaos” and economic disruption after Brexit, an openDemocracy investigation has found.

Firms that have won lucrative contracts from DIT have said that British politics is “so dysfunctional” that the government’s current Brexit strategy is “very unlikely” to survive “in its current form”. A DIT-funded trade body even complained that the Brexit trade ministry is “plagued” by indecision, with lateness “systemic in the organisation”.

Fox has also given thousands of pounds of public money to a company run by a former Westminster insider, and hired a scandal-hit contractor that had been accused of making excessive profits from aid contracts.

Anti-Brexit campaigners have accused Fox of the "height of hypocrisy" for saying that Britain would thrive outside the EU even without a Brexit deal while spending big with companies that have warned the opposite.

Squeeze and offshoring

Over the past two years, DIT spent more than £23m on marketing campaigns with Dentsu Aegis, according to government transparency data. But earlier this year, the ad agency said that Brexit has resulted in less money being spent on advertising in Britain.

"The Brexit process has done little to boost economic confidence and there are concerns that a squeeze on household spending may result in cuts to marketing spend," Dentsu Aegis’s Global Adspend Forecast report said in January.

As part of Fox’s ‘Great’ trade campaign his department has also spent almost £17m with M&C Saatchi - the ad firm behind the remain campaign in the 2016 Brexit referendum.

DIT also paid more than £20m to executive management firm Green Park. In a LinkedIn post last year, a managing partner in human resources at Green Park wrote that there is “no denying Brexit will affect the supply of talented, diverse candidates, will encourage movement of European talent and will enable large-scale off-shoring and the creation of new European hubs for historically British-based traders”.

Chequers and chaos

Multinational consultancy EY has received more than £30m from Fox’s department. In its most recent advice to business on Brexit planning, EY warned that Theresa May’s Chequers plan is “very unlikely” to survive “in its current form”.

Grant Thornton received more than £15m from the Department for International Trade, but the consultancy’s Dutch outfit has reported fears of “chaos” in transport and logistics sector after Brexit.

Fox has complained the British businesses are “too lazy and fat” to export overseas but a trade body that received DIT funding said that the department has “no budget” for supporting small businesses and is “disincentivising” companies from exporting.

"There is no budget to support any exhibition in the shipbuilding sector in the 2018-19 financial year,” Tom Chant, director of the Society of Maritime Industries, said in June. The society has received over £57,000 from the department, with the last payment in 2017.

“Apart from the fact that we have no budget, the lateness of all DIT decisions seems to be systemic in the organisation,” said Chant. “How does this match with the UK being a global trading nation?”

DIT also spent more than £11.5m on ‘subscriptions’ to the World Trade Organization as part of the process of leaving the European Union. Liam Fox has spoken enthusiastically of trading under WTO terms in the event of no-deal Brexit, with the minister even putting the chances of the UK leaving the EU without an agreement at ‘60/40’.

The department’s published spending data lists hundreds of companies. Not all have a position on Brexit. In April of this year, DIT spent £189,000 on marketing and media with workspace start-up Second Home, which is run by former Number 10 advisor Rohan Silva. Fox's department also hired a scandal-hit aid consultancy as part of a new investment promotion programme in India, Pakistan, South Africa and Nigeria.

Adam Smith International (ASI) withdrew itself from bidding for contracts from the Department for International Development (DFID) for a year up to February 2018 following media reports that a member of staff had improperly obtained DFID country business plans. A subsequent DFID assurance review found that “ASI did not gain any significant or specifically identifiable commercial advantage from reviewing the business plans”.

The contractor successfully bid for cash from Liam Fox’s department while it was sitting out DFID funding rounds. In December 2017, the department for international trade gave ASI a contract worth more than £25,000.

“Height of hypocrisy”

A spokesperson for the People’s Vote campaign that argues for a second referendum on Brexit said: “It’s the height of hypocrisy for Liam Fox, who frequently plays down the risks of a disastrous no deal Brexit, to be handing over millions to companies that are warning exactly the opposite.

“Perhaps it should come as no surprise that the most pointless minister in the Government doesn’t seem to be on top of his own department’s spending.”

A spokesman for DIT said: “We really don’t care [if a company] is for Brexit or against Brexit or have not expressed an interest at all. It is very much about providing services that deliver value for money for the taxpayer, which are high quality and which have been objectively identified through a fair, open and transparent tender process.”

About the authors

Peter Geoghegan is investigations editor of openDemocracy's main site. He can be found on Twitter @PeterKGeoghegan.

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